2 Healthcare Stocks to Buy After Crushing Q3 Earnings Expectations: ELV & ISRG

Healthcare stocks Intuitive Surgical ISRG) and Elevance Health ELV) are worth considering after both companies delivered better-than-expected third-quarter results this week, highlighting encouraging growth across the medical instruments and services industries.

With strong earnings momentum and favorable outlooks, both stocks present attractive investment opportunities following their strong Q3 reports.

Intuitive Surgical – ISRG: Robotic Surgery Growth Accelerates

Intuitive Surgical, a global leader in robotic-assisted surgery, reported adjusted Q3 earnings of $3.00 per share, surpassing the Zacks Consensus Estimate of $2.61 by nearly 15% and climbing 25% from EPS of $2.40 in the prior-year quarter.

Revenue jumped 22% to $3.05 billion, beating expectations of $2.88 billion by almost 6%. Growth was supported by continued adoption of Intuitive's da Vinci surgical systems, with worldwide da Vinci procedures increasing 14%. Notably, the company placed 546 da Vinci systems during the quarter, up 28% from 427 a year ago.

Despite strong results, ISRG shares have faced selling pressure amid concerns about slowing procedure growth, increased competition, and a $450 million antitrust settlement. However, expanding robotic surgery adoption and Intuitive's growing installed base continue to support its long-term outlook.

Encouragingly, management maintained its FY26 outlook for worldwide da Vinci procedure growth of 14%-15%, while projecting adjusted gross margins of 68.7%-69.3%, reinforcing expectations for continued demand and solid profitability.

Furthermore, Intuitive Surgical has now surpassed earnings expectations for 15 consecutive quarters, posting an impressive average EPS surprise of 15.12% over its last four reports.

Elevance Health – ELV: Better Medical Cost Management Boosts Margins

Health insurance giant Elevance Health delivered an impressive Q3 earnings beat as well, posting adjusted EPS of $6.99. This exceeded the Zacks Consensus Estimate of $4.66 by 50% and increased16% from $6.03 per share a year ago.

Operating revenue climbed modestly to $50.4 billion, topping expectations by nearly 3%, supported by stronger premium yields and growth in its Carelon healthcare services business. Optimistically, Elevance's benefit expense ratio improved 70 basis points to 90.6%, reflecting better medical cost management.

Adding to investor optimism, Elevance raised its FY26 adjusted EPS guidance from $27.00 to at least $29.00 per share. Plus, management expects adjusted earnings growth of at least 12% in FY27, excluding certain one-time benefits from its FY26 results, signaling confidence in improving profitability.

ELV shares are up 25% year-to-date and offer a solid annual dividend yield of 1.56%. Furthermore, Elevance has exceeded earnings expectations for five consecutive quarters, posting a very impressive average EPS surprise of 23.94% over its last four reports.

Bottom Line

Intuitive Surgical and Elevance Health offer two distinct ways to capitalize on growth in the medical sector, with ISRG benefiting from expanding robotic surgery adoption and ELV demonstrating improving profitability and cost management.

Most importantly, both stocks currently sport a Zacks Rank #2 (Buy), making them compelling healthcare stocks to consider following their better-than-expected Q3 results.

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This article originally published on Zacks Investment Research (zacks.com).

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